HC Deb 18 November 1952 vol 507 cc1588-94
The Minister of Transport (Mr. Alan Lennox-Boyd)

With your permission, Mr. Speaker, and that of the House, I should like to make the following statement about British Transport Commission freight charges.

An increase of 10 per cent. in the railway freight, dock and canal charges of the British Transport Commission was made with my predecessor's authority under Section 82 of the Transport Act on 31st December, 1951. During 1952, increases were made in the London passenger fares and in railway passenger fares outside London under the authority of a charges scheme confirmed by the Transport Tribunal, and in the fares of bus companies owned by the Commission with the authority of the licensing authorities. A memorandum submitted to me by the Commission shows that in addition to other substantial increases in costs, some of which result from wage increases in other industries, the recent wage award would add about £18 million in a full year to the Commission's expenses.

In these circumstances, the Commission applied for my authority to increase by 5 per cent. their railway freight, dock and canal charges. As required by Section 82 of the Transport Act, 1947, I sought the advice of the permanent members of the Transport Tribunal, acting as a Consultative Committee. I have now received that advice, a copy of which will be circulated in the OFFICIAL REPORT.

The Consultative Committee find that unless charges are increased, the Commission will incur a deficit of between £20 million and £22 million in a full year, and they advise that immediate measures be taken to enable the Commission to obtain additional revenue of this order. The Consultative Committee also say that an increase of 5 per cent. in railway freight, dock and canal charges would produce about £12 million a year and a further £2½ million a year would be produced by a 5 per cent. increase in road haulage rates which the Commission have power to make and which they would propose to make at the same time.

In the memorandum submitted to me, the Commission indicated that the whole question of passenger fares will be brought under review. Any increase in the maximum charges laid down in the charges scheme now in force would require the prior approval of the Transport Tribunal, while any increase in the fares charged by the bus companies owned by the Commission would require the prior approval of the licensing authorities concerned. The Consultative Committee do not, therefore, express any opinion as to the amount of additional revenue which may be obtained from these two sources, and have disregarded the possibility that the Commission might at some future date obtain further revenue from these sources.

The Consultative Committee, therefore, advise that the only measures immediately available which would meet the position are an increase of 7½ per cent. in railway freight, dock and canal charges, coupled with a similar and simultaneous increase in the Commission's road haulage rates; that the additional revenue of £12 million a year which would be produced by an increase of 5 per cent. in railway freight, dock and canal charges is the minimum contribution which can be required of these services.

I have decided to adopt the figure for which the Commission have asked and to make regulations under Section 82 of the Transport Act authorising an increase of 5 per cent. in the Commission's railway freight, dock and canal charges, as from 1st December, 1952. It will be open to the British Transport Commission to apply to the Transport Tribunal for an alteration of the existing Passenger Charges Scheme. The earliest date on which such applications could be made are 2nd March next, in the case of London, and 1st May next, in the case of railways outside of the London area. These dates are in each case 12 months after the coming into force of the London and Provincial sections of the present Scheme.

Mr. Barnes

May I express my appreciation of the Minister's decision to make this statement even while we are considering the Transport Bill?

There are one or two points that I should like to put to him. Can he indicate how much of this accumulated loss of £20 million to £22 million was caused by the decision of the Government when they interfered with the transport charges in the spring of this year? Secondly, I notice that the Minister states that £2½ million will be produced by a 5 per cent. increase in road haulage rates, and that the Commission have power to make this increase and propose to do so.

It seems strange that at this period when the Commission so much needs this amount, the Government are proposing to take the road haulage undertakings from them. Will they, in fact, get this £2½ million that is referred to in the Minister's statement? Finally, what guarantee have we that if we approve of this the Prime Minister will not intervene and upset the apple-cart?

Mr. Lennox-Boyd

If I have got those three questions right, I should like to start by replying to the last one. The intervention by the Government earlier in the year—[HON. MEMBERS: "By the Prime Minister."]—by the Government earlier in the year was solely due to the use by the Commission of the discretion—[Interruption.] Do hon. Members opposite want to hear an answer or not? This question is of immense importance to the trading community. The Commission were limited to the use of the discretion given to them by the Transport Tribunal, and on that single issue alone a perfectly proper Government intervention took place.

In regard to the second question asked by the right hon. Gentleman it is unfortunately true, as I pointed out in the debate last night, that during this coming year it is very unlikely that the road haulage services of the Commission will in fact be adding to the net profits of the Commission.

In regard to the first question, these increased costs are caused solely—as the communications from the Commission to me have shown—by the following extra charges: £5 million more on their coal bill—of which a large part is due to increased wages—£2½ million on steel: £5½ million on fuel duty; £1.3 million on National Insurance and £18 million on the recent wage awards to their own employees.

Mr. Maclay

Will the Minister look into a point which emerged in December last year, when there was an increase in the charges of 10 per cent. At that time it was found possible to limit the increase to a maximum of 10s. a ton in the interests of long-distance traffic—above all in Scotland. With regard to the present increase of 5 per cent. will my right hon. Friend examine the possibility of limiting the increase, possibly to 5s. per ton, for the same reason—to give the maximum protection to long-distance traffic particularly to Scotland?

Mr. Lennox-Boyd

I know that my right hon. Friend, as much as anybody else, appreciates that these are recommendations made to the Tribunal and by the Tribunal to me. Though in December, 1951, the Commission proposed to the Tribunal and the Tribunal accepted that with a 10 per cent. increase there should be a limitation to 10s. per ton, in this case they made no such recommendation. But the most careful research into this most important point has shown—it is rather a complicated mathematical formula—that the benefit of the previous taper as applied to long journeys to Scotland has also increased by 5 per cent. and this is an automatic follow up of the decision reached quite rightly in December last year.

Mr. Ernest Davies

Does not this statement by the Minister add considerable point to the suggestion made by the hon. Member for Abingdon (Sir R. Glyn) yesterday, that before we tinker with the British Transport Commission there should be a full inquiry, in view of the effect of the proposed Bill on the finances of the Transport Commission? Will the Minister take the advice of his hon. Friend?

Mr. Lennox-Boyd

That does not follow in the least. The major cause of this regrettable increase in freight rates is the £18 million which has been added to the wage bill. I take it that no one in this House is going to quarrel with the decision already reached.

Captain Robert Ryder

Will my right hon. Friend bear in mind that when freight rates are increased, it has the effect of subsidising the passenger rates in the country as a whole, but as far as London is concerned, any increase in working costs has to be borne by the passengers?

Mr. Lennox-Boyd

I recognise that fact, and I have brought in a special reference to the possible consequence on passengers.

Mr. Speaker

These general considerations could well be raised on the first Order of the Day.

Following is the copy of the advice of the Consultative Committee:

  1. 1. By a letter dated the 29th October you ask for our advice on a request made by the British Transport Commission that they should be authorised under section 82 of the Transport Act, 1947, to increase by 5 per cent. the railway, dock and canal freight rates and charges now in operation. The estimates in the memorandum submitted by the Commission, copies of which accompanied your letter, were directed to showing (1) that owing mainly to the recent wage increases the activities of the Commission as a whole would, if they were unable to increase their revenue, result in a full year in a deficit of about £21 million and (2) that the particular increases in their charges for which authority was sought would in a full year produce about £12 million additional revenue.
  2. 2. It will be remembered that when our advice was sought in November, 1951, upon a proposal of this kind we were nearing the end of a prolonged public inquiry and that the advice we then gave was based on the conclusions we had formed as to the probable financial results of the Commission's activities during 1952. It seemed to us that our consideration of the Commission's present memorandum would be assisted if the figures contained in it were expanded in such a way as would enable us to compare the estimate we had made at the end of 1951 with the facts revealed by the actual working of the Commission during 1952.

We have accordingly obtained from the Commission a detailed analysis of the "Estimate of financial results for a 'future year'" attached to their memorandum which has enabled us to compare this estimate with that upon which the advice we gave on that occasion was based.

3. The conclusions we have reached as a result of our examination of the material available to us are as follows:—

  1. (1) that if it had not been for the recent increases in wages the accounts of the Commission for 1952 would have shown a surplus of about £1½ million;
  2. (2) that owing to these increases there will instead, if no corrective measures are taken, be a deficit of about £2½ million;
  3. (3) that in a full year the effect of these increases alone will be to increase the working expenses of the Commission by about £17.8 million;
  4. (4) that the recent issue of £120 million of Transport Stock will result in a full year in an addition to the "Central Charges" of the Commission of over £4 million;
  5. (5) that it would be imprudent to expect any increase in the volume of the traffic from which the revenues of the British Railways and the Docks and Canals sections of the Commission's undertaking are drawn;
  6. (6) that because of the increase in their wage costs and in the cost of servicing the Transport Stock, referred to in sub-paragraphs (3) and (4) above, the Commission's activities will in a full year if their charges are not increased result in a deficit of between £20 million and £22 million;
    7. 1593
  7. (7) that an increase of 5 per cent. in the railway, dock and canal freight rates and charges would in a full year produce additional revenue of the order of £12 million;
  8. (8) that such an increase in the revenue drawn from the British Railways, Docks and Canals would represent about 80 per cent. of so much of the increase in costs referred to in sub-paragraphs (3) and (4) as could reasonably be regarded as chargeable against these sections of the Commission's undertaking.

4. We note from the Commission's memorandum that if they are authorised to increase the railway, dock and canal freight rates and charges by 5 per cent. they intend to increase road haulage rates simultaneously by the same percentage and that they hope thereby to obtain additional revenue of about £2½ million per annum.

5. The only other services which contribute substantial sums to the Commission's revenue are (1) the passenger services of British Railways and London Transport, and (2) the Provincial and Scottish road passenger services.

We do not think it would be right for us to discuss the possibility of obtaining additional revenue from the first of these two groups of services, or that any such discussion, if justifiable, could lead to any conclusion which would throw any light on the question how best to alleviate or remove the immediate financial difficulties of the Commission. No substantial additional revenue can be obtained unless the Charges Scheme confirmed by us on the 27th February last is modified and this Scheme can only be modified if, after hearing all qualified objectors at another public inquiry, we decide that it ought to be modified. It would plainly be improper for us acting as a Consultative Committee to prejudge in any way an issue determinable by us only when sitting in our normal capacity as a Tribunal.

The same primary objection stands in the way of any discussion of the possibility of obtaining any additional revenue from the second of the two groups. No alteration can be made in the fares charged by the services in question without the prior approval of the local Licensing Authorities concerned. We cannot properly take upon ourselves a task which Parliament has imposed on other bodies. Nor could we in fact, even if it were proper for us to attempt to do so, form any useful opinion upon the extent to which these other bodies might be found willing to authorise any increase in the fares at present charged, or as to the aggregate additional revenue which those hypothetical increases might be expected to produce, or as to the time at which any such additional revenue might become available.

We have accordingly, in considering what advice we should tender, neglected the possibility that the Commission might at some future date obtain some further revenue from these two sources.

6. The advice we tender is, for the reasons which, we hope, are sufficiently indicated in the foregoing paragraphs, as follows:—

  1. (1) that it is desirable that immediate measures be taken to enable the Commis- 1594 sion to obtain additional revenue of the order of £20 million to £22 million per annum;
  2. (2) that the only measures immediately available whereby additional revenue of this order of magnitude could be obtained are:—
    1. (a) an increase of 7½ per cent. in the railway, dock and canal freight rates and charges, coupled with
    2. (b) a similar and simultaneous increase in the Commission's road haulage rates;
  3. (3) that the additional revenue (£12 million per annum) obtainable by the measure proposed by the Commission, namely an increase of 5 per cent. in the railway, dock and canal freight rates and charges, is the minimum contribution which can be required of these services towards the relief of the Commission's immediate financial difficulties

(Sgd.) HUBERT HULL.

(Sgd.) A. E. SEWELL.

(Sgd.) J. C. POOLE.

13th November, 1952.